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Schlumberger revenue soars

Schlumberger reported its revenues jumped 24 per cent during the third quarter but the world&#39;s largest oilfield services company said Friday that the global economic crisis will undoubtedly take a toll.

Fri., Oct. 17, 2008

HOUSTON–Schlumberger reported its revenues jumped 24 per cent during the third quarter but the world's largest oilfield services company said Friday that the global economic crisis will undoubtedly take a toll.

With a barrel of oil going for more than $100 for most of the quarter, Schlumberger reported net income of $1.53 billion, or $1.25 per share, compared with $1.35 billion, or $1.09 per share, during the same period last year.

A violent hurricane season cut away 4 cents per share in profits for the quarter, Schlumberger said. Without the disruptions, diluted earnings-per-share would have been $1.29, the company said.

Schlumberger reported revenues of $7.26 billion, up from $5.93 billion last year.

Profits, excluding disruptions from hurricanes Gustav and Ike, matched the per share estimates of analysts polled by Thomson Reuters. Revenue slightly exceeded expectations of just over $7 billion.

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Shares rose 4 percent, or $2, to $52.60 in premarket trading.

Schlumberger Ltd. is the first major company in the oil sector to report quarterly results and is a bellwether for the industry.

On Friday, Chairman and Chief Executive Officer Andrew Gould said the global financial meltdown would "undoubtedly have an effect on our activity," and said he anticipated it would be felt most acutely in North America and some emerging markets.

North America was a strong driver during the quarter, with revenue rising 15 percent to $1.5 billion.

"The rate at which the world economy will slow has become increasingly uncertain," Gould said. "We have always maintained that the one event that could slow the rate of increase in worldwide exploration and production spending would be a reduction in the demand for oil caused by a severe global recession.''

The price for oil has been halved since reaching record highs near $150 per barrel in July, and so have shares of Schlumberger.

Should giant oil producers like Royal Dutch Shell PLC, BP PLC, Exxon Mobil Corp., Chevron Corp. and Total SA cut back on drilling as prices fall, it would slow business for companies like Schlumberger, which provides a wide array of services from drilling to equipment sales.

Schlumberger shares hit a yearly high shortly before the price of oil hit an unheard of $147.27 on July 11.

Oil prices were just above 14-month lows Friday with many people expecting that an extended global recession will evaporate the world's appetite for crude.

Schlumberger shares have fallen more than 50 percent from their July highs.

"At the moment, it is still too soon to predict to what extent current events will affect overall activity in 2009, but we anticipate a slowing in the rate of increase of customer spending," Gould said.

Schlumberger's third quarter, however, was marked by triple-digit oil prices.

Revenues from Europe and Africa rose 28 percent to $2.17 billion, and Schlumberger said pretax operating income was $628 million, up 27 percent from last year.

"A strong continuation in sequential revenue growth in the third quarter was led by further strengthening of gas drilling activity on land in the US and Canada, a very active summer drilling season in Russia and continued growth of IPM activity in Latin America," Gould said. "Margin performance was generally satisfactory apart from the heavy impact of the hurricane season on North America.''

Gould said that any slump in exploration and production would lead to an even stronger recovery, and that Schlumberger would emerge as a stronger company.

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